Discussion

Seems like a similar model to Republic
Definitely makes sense for Crowdfunding platforms to follow this path
From the announcement:
Unlike rewards-based crowdfunding, with equity crowdfunding, individuals receive company shares, not just perks, in exchange for their equity investment. Not only can businesses gain the crucial help they need from a broader pool of funders—but investors can support business they believe in, and can even benefit financially if a company goes on to greater heights.

This is a logical extension of Indiegogo but I’m still unsure if “normal” people want to invest in startups. People back crowdfunded products because they want to support a cause/creator or buy the product being sold. There’s certainly an opportunity in equity crowdfunding — as evidenced by the numerous platforms emerging in this space — but it will take time for people to get comfortable with it and imho much of its success will influenced by how it’s marketed.

@rrhoover This x 100%, Ryan. Startup investing is so extremely high risk, and normal people need to be sure they really really understand that. Crowdfunding investors have so much less information and presumably worse terms than VCs. This is quite a complicated subject, and one I hope many people don't learn the hard way.
(Now if it's used to help start and fund small business, my views are a bit different.)

@kicksopenminds@rrhoover This is exciting for non-accredited investors (anyone whose income is less than $200K). Protecting the "normal people" is very important and that is why it is heavily regulated on a state by state basis. Colorado, for example, non-accredited investors are limited to $5,000 in investments in a 12-month period. Creates opportunity for people who wouldn't otherwise be able invest and potentially gain.

@kicksopenminds@rrhoover Those are Colorado's Intrastate Crowdfunding rules, most states have legislated protections (75%+). Understand the concerns, many of the laws on the books before the SEC adopted rules on Title III of the Jobs Act date back to the 1930's, but with todays technology, access to information and proper protections for "normal people" equity crowdfunding will be a game changer

Anyone else out there believe "normal people" should not invest in startups?
The requirements for being an accredited investor are not that outlandish, and they help protect people which might not understand the extremely highly risk they're undertaking...

@kicksopenminds I agree, normal folks will have little to no ability to properly vet an investment. Crowdfunding has an unfortunate history of letting scientifically impossible campaigns get massively funded before they fall apart or deliver worthless attempts at products. Consumers will be even more likely to contribute since they will expect to get $$ back instead of a device.
On the entrepreneur side, most will be smart and avoid crowdfunded dollars since they won't come with any additional benefits or help that you could get from a real VC or angel. This will probably leave crowdfunding mostly to companies that couldn't get past VC vetting, and could lead to an even lower rate of success than startups already have.
Some may be clever and use it as a marketing tool though, like a lot of crowdfunding campaigns for VC backed co's. Some great companies may come out of this. But this kind of arrangement makes it relatively easy for bad actors to take advantage of normal people who want to get in on the next Snapchat without having the knowledge to properly vet their investment.
I like the idea in theory though, and I hope to be proved wrong. It's worth noting that Indiegogo seems to be taking a responsible approach here, but I'm still concerned others may not.